Pepsi Bottling rejects PepsiCo acquisition offer

Pepsi Bottling Group Inc. said Monday that it has rejected what it called a “grossly inadequate” acquisition offer from soft drink maker PepsiCo Inc.

The bottler also looked to further shield itself from any bids that it doesn’t deem favorable, saying it had approved a stockholder rights plan. Such plans, also known as “poison pills,” are commonly used as a way to try to hold off hostile takeover attempts.

The $6 billion proposal for Pepsi Bottling and PepsiAmericas would have let PepsiCo control about 80 percent of its total North American beverage volume.

Pepsi Bottling Group stated in a letter sent to PepsiCo Chairman and Chief Executive Indra Nooyi that it values its relationship with PepsiCo, but would not agree to a deal that doesn’t reflect its “true value.”

Pepsi Bottling pointed out to PepsiCo that the offer, made April 20, came two days before its first-quarter earnings. The bottler’s first-quarter profit more than doubled on a favorable tax audit settlement, which led it to boost its earnings forecast for the year. The results also easily beat Wall Street’s expectations.

Pepsi Bottling said its board’s decision was based on the unanimous recommendation of a special committee made up of independent directors.

The board also approved retention arrangements for some key workers and bylaw amendments related to notice and informational requirements for stockholder actions.

PepsiCo currently owns 33 percent of Somers, N.Y.-based Pepsi Bottling group and 43 percent of PepsiAmericas, which is based in Minneapolis. Its offers equated to $29.50 per for share for Pepsi Bottling Group and $23.27 per share for PepsiAmericas.

Bill Pecoriello, an analyst who heads ConsumerEdge Research LLC, said more realistic prices are at least $38 a share for Pepsi Bottling and $28 a share for PepsiAmericas. He expects PepsiAmericas to also reject the offer as inadequate.

“We believe these transactions will get done and that the bottlers will meet PepsiCo somewhere in the middle,” he said.